Feds Rein in Shell Games With Ritzy Real Estate

Those planning on scooping up a high-end property on the sly—i.e., paying cash via a shell company—may soon have to come up with a new game plan. The Treasury Department announced Wednesday it will start making title insurance companies ID secret buyers of property going for more than $3 million in Manhattan and $1 million in Miami-Dade County, the New York Times reports. The identities of individual purchasers won't be made public, notes the Miami Herald. It's a first by the feds, the Times notes, in an attempt to use a "risk-based approach to [combat] money laundering in the real estate sector." "We are seeking to understand the risk that corrupt foreign officials, or transnational criminals, may be using premium US real estate to secretly invest millions in dirty money," says the director of the department's Financial Crimes Enforcement Network.

Setting up a shell firm such as a limited liability company is legal, and LLCs are often used to buy real estate for non-criminal reasons, per the Times. But as a recent Times series points out, these same companies are often set up to conduct not-so-transparent sales to create a "safe haven" for foreign buyers. Under the mandate of these temporary geographic targeting orders, or GTOs—they're set to go into effect on March 1 and last, for now, through Aug. 27—title insurance companies will need to find out who each real buyer is and submit it to FinCEN, which will then input the info into a database accessible by law enforcement, per the release. And if Treasury finds too many suspicious transactions, the reporting requirement will become permanent nationwide, notes the Times. (Someone who may not have buyers for his luxury real estate: Donald Trump.)